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Competitive bidding on local infrastructure heats up
As investors’ appetite for infrastructure increases, local super funds are being outbid on renewable infrastructure, according to Local Government Super (LGS) chief executive Peter Lambert.
Lambert said the fund had been trying to get more exposure to infrastructure assets that built on the environmental, social and governance (ESG) theme of climate change - mainly wind farms and solar farms.
“The problem we, like all super funds, are finding is that everyone’s got a thirst for infrastructure at the moment and it seems that quite often you get outbid on assets,” he said.
Lambert said infrastructure was the missing piece in the fund’s portfolio holdings - and the fact it had trouble securing assets may not have served it well over the last five years.
The fund currently had a bid on a solar farm, he said, but because everyone was interested in infrastructure, prices were bid up.
“Clearly there are other funds, whether they be Australian or more likely overseas funds, that are prepared to accept a lower ROI [return on investment],” he said.
The Trust Company recently said it had found Canadian pension funds’ interest in Australian infrastructure and property was on the rise due to the country’s legal stability, transparent processes and strong relative GDP growth.
LGS would reassess its pricing to see if it its bids were too low or if the market was over-priced, according to Lambert.
NSW Ports Consortium, consisting of Industry Funds Management (IFM), AustralianSuper, Cbus, HESTA, HOSTPLUS and Tawreed Investments Limited won the bid for the 99-year leases of Port botany and Port Kembla last month.
HOSTPLUS has also committed to funding 50 per cent of Sydney Darling Harbour’s new entertainment precinct.
Industry Super Network cited Super Ratings latest performance figures as proof of industry funds outperformance due to their infrastructure holdings.
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